What is the present value of these cash flows, given a 9 percent discount rate?

A) $4,713.62
B) $4,855.27
C) $5,103.18
D) $5,292.25
E) $6,853.61
2.
Today you earn a salary of $28,500. What will your annual salary be fifteen years from now if you earn annual raises average 3.5 percent annually?
A) $47,035.35
B) $47,522.89
C) $47,747.44
D) $48,091.91
E) $48,201.60
3.
Todd is able to pay $160 a month for five years (60 monthly payments) for a car. If the interest rate is a 4.9 percent annual rate, how much can Todd afford to borrow to buy a car?
A) $6,961.36
B) $8,499.13
C) $8,533.84
D) $8,686.82
E) $9,588.05
4.
You have $2,500 that you want to use to open a savings account. You have found five different accounts that are acceptable to you. All you have to do now is determine which account you want to use such that you can earn the highest rate of interest possible. Which account should you use based upon the annual percentage rates quoted by each bank?

account A: 3.75 percent, compounded annually

account B: 3.70 percent, compounded monthly

account C: 3.70 percent, compounded semi-annually

account D: 3.66 percent, compounded quarterly

A) account A
B) account B
C) account C
D) account D
E) account E
5.
You are considering two loans as part of buying a car. The terms of the two loans are equivalent with the exception of the interest rates.

Loan A offers a rate of 7.45 percent compounded daily.

Loan B offers a rate of 7.5 percent compounded semi-annually.

Loan _____ is the better offer because______:

A) A; you will pay less interest.
B) A; the annual percentage rate is 7.45 percent.
C) B; the annual percentage rate is 7.64 percent.
D) B; the interest is compounded less frequently.
E) B; the effective annual rate is 7.64 percent.
6.
What is the future value of $2,896 invested for twelve years at 6.5 percent compounded annually?
A) $5,827.32
B) $6,023.44
C) $6,049.45
D) $6,165.86
E) $6,218.03
7.
You own a classic automobile that is currently valued at $39,500. If the value increases by 6 percent annually, how much will the auto be worth ten years from now?
A) $64,341.34
B) $44,734.42
C) $69,843.06
D) $70,738.48
E) $74,146.93
8.
You just won the lottery! As your prize you will receive $1,200 a month for 100 months. If you can earn 8 percent annually on your money, what is this prize worth to you today (it's present value)?
A) $87,003.69
B) $87,380.23
C) $87,962.77
D) $88,104.26
E) $90,723.76
9.
What is the effective annual rate if a bank charges you an APR of 7.64 percent compounded quarterly?
A) 7.79 percent
B) 7.86 percent
C) 7.95 percent
D) 7.98 percent
E) 8.01 percent
10.
What is the present value of $13,450 to be received four years from today, if the discount rate is a 5.25 percent annual rate?
A) $10,854.20
B) $10,960.59
C) $10,974.21
D) $10,982.18
E) $11,003.14
11.
Janet plans on saving $3,000 a year and expects to earn 8.5 percent annually. She plans to invest the money at the end of each year. How much will Janet have at the end of twenty-five years if she earns what she expects?
A) $219,317.82
B) $230,702.57
C) $236,003.38
D) $244,868.92
E) $256,063.66
12.
Your grandmother invested one lump sum 17 years ago and earned 4.25%, compounded annually per year. Today, she gave you the proceeds of that investment which totaled $5,539.92. How much did your grandmother originally invest?
A) $2,700.00
B) $2,730.30
C) $2,750.00
D) $2,768.40
E) $2,774.90
13.
You would like to give your daughter $40,000 towards her college education thirteen years from today. How much money must you set aside today for this purpose if you can earn an annual 6.3 percent on your funds, compounded quarterly?
A) $17,750.00
B) $17,747.81
C) $18,077.05
D) $18,213.69
E) $18,395.00
14.
You borrow $5,600 to buy a car. The terms of the loan call for monthly payments for four years at a 5.9 percent annual rate of interest. What is the amount of each monthly payment?
A) $103.22
B) $103.73
C) $130.62
D) $131.26
E) $133.04
15.
You have been investing $120 a month for the last 15 years(180 months). Today, your investment account is worth $47,341.19. What is your average annual rate of return on your investments? (Hint: You are calculating a monthly rate that needs to be converted to a yearly rate)
A) 9.34 percent
B) 9.37 percent
C) 9.40 percent
D) 9.42 percent
E) 9.46 percent
16.
You have just graduated from school and have accumulated $24,500 of debt. If the annual interest rate is 6.5 percent and you want to pay it off within five years, how much must you pay each month?
A) $471.30
B) $473.65
C) $476.79
D) $479.37
E) $480.40
17.
Bob bought some land costing $14,990 years ago. Today that same land is valued at $55,000. How long has Bob owned this land if the price of land has been increasing at 6 percent per year?
A) 21.82 years
B) 21.98 years
C) 22.03 years
D) 22.31 years
E) 22.44 years
18.
You are considering an annuity which costs $100,000 today. The annuity pays $6,000 a year at the end of each year. The rate of return is 4.5 percent. How many years of annuity payments will you receive?
A) 24.96 years
B) 29.48 years
C) 31.49 years
D) 33.08 years
E) 38.00 years
19.
You are considering two insurance settlement offers. The first offer includes annual payments of $5,000, $7,500, and $10,000 over the next three years, respectively. The other offer is the payment of one lump sum amount today. You are trying to decide which offer to accept given the fact that your discount rate is 5 percent. What is the minimum amount that you will accept today if you are to select the lump sum offer?
A) $19,877.67
B) $20,203.00
C) $21,213.15
D) $23,387.50
E) $24,556.88
20.
Today, you signed loan papers agreeing to borrow $4,954.85 at 9 percent compounded monthly. The loan payment is $143.84 a month. How many loan payments must you make before the loan is paid in full?
A) 29.89
B) 36.00
C) 38.88
D) 40.00
E) 41.03

About this Question

Need a Finance tutor?

Other Related Questions

Assume Venture Healthcare sold bonds that have a ten-year maturity, a 12 percent coupon rate with annual payments, and a $1,000 par value. a. Suppose that two years after the bonds were issued, the required interest rate fell to 7 percent. What would be the bond's value? b. Suppose that two years after the bonds were issued, the required interest rate rose to 13 percent. What would be the bond's value? c. What would be the value of the bonds three years after issue in each scenario above, assuming that interest rates stayed steady at either 7 percent or 13 percent?

Rating: Not yet rated

Assume that the City of Tampa sold an issue of $1,000 maturity value, tax exempt (muni), zero coupon bonds 5 years ago. The bonds had a 25-year maturity when they were issued, and the interest rate built into the issue was a nominal 10 percent, but with semiannual compounding. The bonds are now callable at a premium of 10 percent over the accrued value. What effective annual rate of return would an investor who bought the bonds when they were issued and who still owns them earn if they are called today?

Rating: Not yet rated

1. A project will produce an operating cash flow of $14,600 a year for 8 years. The initial fixed asset investment in the project will be $48,900. The net aftertax salvage value is estimated at $11,000 and will be received during the last year of the project's life. What is the net present value of the project if the required rate of return is 12 percent? A. $23,627.54 B. $28,070.26 C. $34,627.54 D. $39,070.26 E. $41,040.83 2. One year ago, you purchased a stock at a price of $32.16. The stock pays quarterly dividends of $0.20 per share. Today, the stock is selling for $28.20 per share. What is your capital gain on this investment? A. -$4.16 B. -$3.96 C. -$3.76 D. -$3.16 E. -$2.96 3. Six months ago, you purchased 100 shares of stock in Global Trading at a price of $38.70 a share. The stock pays a quarterly dividend of $0.15 a share. Today, you sold all of your shares for $40.10 per share. What is the total amount of your dividend income on this investment? A. $15 B. $30 C. $45 D. $50 E. $60 4. A year ago, you purchased 400 shares of Stellar Wood Products, Inc. stock at a price of $8.62 per share. The stock pays an annual dividend of $0.10 per share. Today, you sold all of your shares for $4.80 per share. What is your total dollar return on this investment? A. -$382 B. -$372 C. -$1,528 D. -$1,488 E. -$1,360 5. You own 400 shares of Western Feed Mills stock valued at $51.20 per share. What is the dividend yield if your annual dividend income is $352? A. 1.68 percent B.

Rating: Not yet rated

1. Consider a bond with a 7 percent semi-annual coupon and a face value of $1000. Complete the following table. Note that yield to maturity is quoted annually. Years to Maturity -Yield to Maturity(percent)-Current Prices 3 5 3 7 6 7 9 8 9 950 2. One-year T-bill rates over the next four years are expected to be 3%, 4%, 5%, and 5.5%. If four-year T-bonds are yielding 4.5%, what is the liquidity premium on this bond? 3. If a 90 day Canadian promissory note for $1,000 is sold for a 1% discount. What is its effective yield? Note all yields are quoted annually. 4. Accrued interest: If there are 183 days between interest settlement dates and it is 50 days since the last payment. The coupon rate is 3.5%. The quoted price is $950. The face value is $1000. What is the clean price? What is the accrued interest? What is the price that investors pay? 5. A bond pays semi-annual coupon of $40. In half a year, price increases from $950 to $1000. a) what is the capital gain yield? b) what is the income yield? c) what is the holding period return in this half a year?

Rating: Not yet rated

Hello, CAn you please help me with these few questions..thank you!!

Rating:

1. Mega Industries Corporation has eighteen years of a bond outstanding to maturity, an 8.25% nominal coupon, with semiannual payments. The bond has a 6.50% nominal yield to maturity, and can be called at a price of $1,120. a. What is the bonds nominal yield to maturity when called? b. What is the bonds effective yield? If inflation rate is at 2.95% what is the real rate of return? 2. Copper Corporation's Class Semi bonds have a twelve-year maturity and an 8.75% coupon paid semiannually and those bonds sell at their par value. The firm's Class A bonds have the same risk, maturity, nominal interest rate, and par value, but these bonds pay interest annually. Neither bond is callable. a. At what price should the bond sell for? b. Does this bond sell at a discount or premium and why? 3. Flagship Corporation is looking to raise capital by issuing some 26-year bonds. The yield on the bonds is 7.34 percent. The bonds sell 96.75 percent of par value. a. What is the current yield on these bonds? b. What is the effective yield on the bonds? c. What is the Yield to Maturity? What type of bond is this, discount or premium? 4. Big Corporation just paid a dividend of $1.55 per share. The dividends are expected to grow at 28 percent for the next five years and then 14% for two years then level off to a 6 percent growth rate indefinitely. Market value of stock is 45.80 and purchase price was 24.25. a. What is the price of this stock today given a required return of 15 percent? b. Wha

Rating:

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.